Small Talk: Scotty hopes to beam up a refinancing deal

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The Independent Online

Scotty, the military communications group which merged with the videophones company Motion Media, is considering plans for a refinancing or a renewed equity fund raising.

Scotty, the military communications group which merged with the videophones company Motion Media, is considering plans for a refinancing or a renewed equity fund raising.

The company wants to reduce its reliance on an equity finance facility which has forced it to issue a steady drip of new Scotty shares, depressing the share price. Georg Weber, finance director, said the company is in talks over a refinancing and has received several proposals.

Last week, Scotty posted losses of £2.5m for the six months to 31 January. It has burnt through the £5m it raised at the time of the merger last summer, and delays to new orders forced it to use £827,000 of its £3m equity finance facility with Headstart Funds. The cash from Headstart comes in return for tens of millions of new Scotty shares. Mr Weber said he recognised the dilutive effect of the facility and was seeking to minimise further dilution. "There are two ways of doing that. One is a capital raising from existing or new shareholders. The other is to restructure the finance facility," he said.

Scotty says it will break even in the current quarter, thanks to sales of video communications technology for trial by medical services in the Netherlands, by a regional police force in the UK, and in the new Eurocopter.

Last year's fund raising was done at 4p, but the stock dipped as low as 1.875p after last week's disappointing results. The company was stung by that reaction into issuing a new statement - the day after - saying the decrease was unjustified because those orders and others could bring in up to £3m before the end of the financial year.

Visual Defence

Visual Defence, which has raised £26m and floats on Friday worth £45m, ought to see its shares perform well on their debut. The company, another spin-out from the Israeli technology company Emblaze, operates CCTV systems and has just won a security contract for the new Heathrow Terminal 5. The stock was priced at almost half the price-earnings valuation of a similar company, March Networks, which came to market last week.

IncaGold

You would have thought that the stock market has had its fill of computer games companies, after a string of disasters but, just as Eidos is gasping its last breaths before being taken over, here comes IncaGold.

The idea is that Inca is lower on excitement, higher on profit than other games developers who have gone before. It reformats, rather than develops simple games, making them available for PCs, for use as in-flight entertainment or for mobile phones.

The company is raising £1.5m, valuing it at £5.2m, with the cash funding the publication of new games.

Bede

Speculative investors looking for a risky punt might want to look over Bede.

The venerable Evolution Securities, Bede's broker, has just underwritten a £9.3m placing to give the microchip technology company the cash to boost marketing. The company said any extra sales generated would be on top of existing market forecasts.

Bede's "X-ray metrology" tools use X-rays to measure and check the quality of chips. The semiconductor industry is investing again after the post-Millennium downturn (which hit just after Bede floated, sadly for its blue-chip investors). Bede is winning market share, particularly thanks to an industry-wide shift to thinner chips. Brokers who have seen the company say it is putting on a bullish show.

London Asia

More progress for London Asia Capital, the mini-investment bank working in China and surrounding countries. It has been appointed to restructure two Chinese companies - a local government-owned coal mining company called Tianneng, and Hubei Pharma, a spin-off from a long-established drugs business.

London Asia aims to smarten up Chinese companies to make them suitable for investment from the West, and it gets success fees and preferential investment terms for its trouble.

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